The Takeaway: Mobile payments gain momentum
Retailers like WalMart have over the past year been installing in-store payment terminals that accept the cards. The terminals will also work with NFC-ready smartphones like the iPhone 6 and 6 Plus, which use Apple Pay.
But while big-box stores have pushed ahead on mobile payment systems, smaller shops are moving more slowly as they scout out cheaper alternatives. Newly installed payment terminals can cost thousands of dollars. As a result, only about half of the 12 million payment terminals nationwide are likely to be converted to support chip cards or be NFC-ready by the end of the year.
"A lot of small- or medium-sized merchants are on the sideline," at the moment, said Brad Brodigan, vice president of retail for PayPal. "They are trying to understand the cost for the hardware and software to make the change and most see it as an investment or cost."
Options for smaller retailers are emerging, however, that could spur growth in the industry:
Jordan McKee, a 451 Research analyst said the smaller devices from Square, PayPal and others are likely to be the cheapest option. "These cost-effective solutions provide small merchants a quick and easy onramp to accepting new payment technologies such as Apple Pay and chip cards," he said. "I see dual-interface [chip and NFC-ready] solutions as playing a signature role in building out acceptance amongst small merchants who are widely anticipated to be late adopters."
Also spurring adoption: Card counterfeit fraud liability will shift from banks to merchants on Oct. 1. As a result, Brodigan said, retailers run the risk of liability if they don't upgrade their terminals.
With reports by Matt Hamblen at Computerworld.